ALBANY - Republicans in Congress are confident they will be able to pass a sweeping overhaul to the federal tax code this week, and New York would be one of the states most heavily impacted.

With lowered tax brackets and a near doubling of the standard deduction, New Yorkers with moderate to middle incomes and limited property taxes could end up with lower taxes. But higher income New Yorkers with high property taxes could take a hit, experts and state leaders said.

And if wealthy New Yorkers are negatively affected, that would strain state and local budgets that are used to pay for programs and services. Already, the wealthiest New Yorkers pay about 40 percent of the state's total income taxes.

"What New Yorkers need to know is that despite what all they heard, they most likely are getting a tax cut personally," said EJ McMahon, founder of the Empire Center, a fiscally conservative think tank in Albany.

"I think the problem with the bill is that it will place, inevitably, some added stress on state finances because we are so overly dependent on high-income people who are basically getting an increase in their state tax."

State and local taxes

Initially, Congress was debating whether to end all state and local tax deductions, known as SALT — which has been allowed since 1913 and is a key break in high-tax states. Then lawmakers considered pushing the limit to $10,000 only on property taxes.

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But the final bill would allow up to $10,000 in deductions for all state and local taxes, including property taxes — so it's better than previous versions.

The deduction would be fine for most of upstate, where property taxes are lower than in the New York City area.

But for the city's suburbs, the change would be problematic — and it is a key reason why Democrats in New York, including some Republicans, are opposed to the tax bill.

Gov. Andrew Cuomo said New York already gives about $40 billion more to Washington in tax revenue than it gets back. So the bill is a way to pull more revenue out of blue, wealthier states to pay for the $1.5 billion tax-cut plan aimed largely at corporations, he said.

"New York and California, which already contribute more to the federal government than other states — they get hit disproportionately hard by eliminating what’s called the deductibility of state and local taxes," the Democratic governor said Sunday on 970-AM (WNYM) in Manhattan.

"They use New York and California and other Democratic states as the piggy bank, the funding mechanism to fund the other states."

In Westchester County for example, the average property-tax bill is $15,000 compared with a statewide average of $8,700, according to a report last month from Comptroller Thomas DiNapoli.

Multimilliionaires in New York would still benefit from a lower top tax rate and an expansion of the so-called estate tax: The exemption for the "death tax" would increase from $11 million to $22 million.

The state-and-local-tax issue, though, has divided GOP House members from New York.

Rep. John Faso, R-Kinderhook, Columbia County, represents parts of the upper Hudson Valley and has voted against the various iterations of the tax plan.

“I want to support a tax-reform bill, but I have consistently stated that I will only do so if a bill helps New York’s economy and lowers the taxes of all hardworking New York families," Faso said in a statement Dec. 11. "The bills passed in both the House and Senate fail to meet these requirements.”

Strain on government

Upstate Republicans in New York who are supportive of the plan have pointed to the benefits most of the residents in their district would receive.

The standard deduction would increase from $12,700 to $24,000 for couples filing jointly, while the child-tax credit would increase from $1,000 per child to $2,000.

But while the plan would lower the tax rates, it would also do away with personal exemptions of $4,050 per person.

If approved by Congress, the tax bill would take effect Jan. 1, but it wouldn't impact individuals' tax filings until April 2019 — since next year's filing would be for income earned in 2017.

Rep. Tom Reed, R-Corning, said his largely rural district through the Southern Tier would come out ahead.

“Hardworking New Yorkers deserve tax relief,” Reed said in a statement Nov. 16 after the latest version of the House bill was passed. “This bill ensures families across the Southern Tier, Finger Lakes, and western New York will be able to keep $1600 more of their hard earned dollars. This is a win for our region.”

Cuomo and other state and local officials, though, warn that the tax plan would have a ripple effect across the state — even in places where individual residents could get a tax break.

New York already faces a $4 billion deficit for the fiscal year that starts April 1. Another provision of the federal tax overhaul would end, in 2019, the Affordable Care Act mandate that people have insurance or face a tax fine.

New York has more than 4 million people on its health exchange, in part because of the individual mandate. So the change, as well as other potential cuts to Medicaid, would impact state finances and insurance rates.

Cuomo said the proposal could lead wealthy New Yorkers to leave for lower-tax states. Already, New York leads the nation in out-migration.

An analysis by The Empire Center found that if 250 of the state’s highest earners left, New York could be out at least $500 million in yearly tax revenue. Ironically, Cuomo has faced criticism from conservatives for retaining a millionaires' tax since he took office in 2011.

But now he said the federal tax plan would only lead to a further divide between New York and less expensive states.

"If they leave, and we lose that 40 percent, what happens. Only one of two things," Cuomo said last Wednesday in Albany about rich New Yorkers.

"Option A, government cuts funding, primarily to education. Or option B, that 40 percent takes their money elsewhere and the burden then falls to everyone else: The middle class and the working families. That is the reality that we are looking at."

Housing market

The New York housing market has been sizzling over the past several years as demand has largely outpaced supply, particularly in the Hudson Valley.

The tax plan would allow for mortgage interest on new home purchases to be deducted by up to $750,000 borrowed, but that would not be enough in some suburban areas with expensive homes.

DiNapoli said last month that New York reported $72 billion in income and property-tax deductions in 2015 — second only to California — and a whopping 14 percent of all the deductions nationwide.

Also, more than one in five New York taxpayers had mortgage interest deductions, averaging $8,727 a year.

A report by Moody's Analytics last month found the New York City suburbs, south Florida, the West Coast and big Midwestern cities could see house prices fall by 10 percent because of the cap on deductions.

“There really are big winners and losers here,” said Mark Zandi, Moody's chief economist, told the New York Times. "If you live in New York or New Jersey, you’re going to get crushed. If you’re in West Texas or Nebraska, no big deal, and you may even benefit.”

Duncan MacKenzie, CEO of the state Association of Realtors, said he isn't convinced New York's housing market would suffer long term from the bill, saying taxes are only one reason why people shop for homes.

But he opposes the plan and said it would certaintly raise taxes in parts of New York, while at the same time providing large tax breaks to corporations.

"States like New York, particularly metro New York and Westchester, there are going to be a lot of people who pay more taxes — and why?" MacKenzie said.

"This idea that there is a guaranteed trickle down in the economy by giving these corporations such a big tax cut, that is a theory that has yet to be proved."